Business Strategy

A business strategy is the means by which it sets out to achieve its desired ends (objectives). It can simply be described as a long-term business planning. Typically a business strategy will cover a period of about 3-5 years (sometimes even longer).1

Types of Business Strategy»

A business strategy is concerned with major resource issues e.g. raising the finance to build a new factory or plant. Strategies are also concerned with deciding on what products to allocate major resources to - for example when Coca-Cola launched Pooh Roo Juice in this country.
Strategies are concerned with the scope of a business' activities i.e. what and where they produce. For example, BIC's scope is focused on three main product areas - lighters, pens, and razors, and they have developed superfactories in key geographical locations to produce these items.
Two main categories of strategies can be identified:
1. Generic (general) strategies, and
2. Competitive strategies. 2

Generic Strategies»

The main types of generic strategies that organisations can pursue are:
1. Growth i.e. the expansion of the company to purchase new assets, including new businesses, and to develop new products. The Inland Revenue has expanded from being just a tax collector, to other functions such as collecting student loan repayments and paying tax credits.
2. Internationalisation/globalisation i.e. moving operations into more and more countries. For example companies like Gillette, Coca-Cola, Kellogg's, and Cadbury Schweppes are major multinationals with operations across the globe.
3. Retrenchment involves cutting back to focus on your best lines. The Americans refer to this as 'sticking to the knitting' - i.e. concentrating on what you do best.

Competitive Strategies»

Competitive strategies are also important. Competitive strategies are concerned with doing things better than rivals. To be competitive a firm shouldn't just copy the ideas of rivals. They should seek to out compete rivals. There are two main ways of being competitive.
1. By selling goods at lower prices than rivals. This is possible when a firm is the market leader and benefits from economies of scale.
2. By differentiating your product from those of rivals - which enables you to charge a higher price if desired.
The airline industry is divided into two main segments. At one end of the market are the premium price category firms such as British Airways that concentrate on differentiation. They offer better service to passengers, more legroom, in flight entertainment, and more individualised attention. At the other end of the market the emphasis is on being the low cost producer and is exemplified by 'no frills' airlines such as Ryanair. Ryanair focuses on short haul destinations and keeping its planes in the air as frequently as possible in a 24 hour period.
Economies of scale - The advantages that large firms have from producing large volumes of output enabling them to spread their costs over more units of output.
Differentiation - Making a product different from rival offerings e.g. through packaging and labelling, customer care, additional extra features, etc.

Integrated Strategy Model»

There are many 'plans' that seek to help manage a business. The business plan, the marketing plan, the strategic plan, the project management plan, etc. Integrated Strategy Model (ISM) combines those 'plans' into one comprehensible, integrated, 1-page model. It focuses on inter-relationships between the different parts of the model - particularly how one part of a plan affects the others


Source: Jean Fahmy

See Also»

Balanced Scorecard
Business Process Management
IT Strategy
Business IT Alignment


1Definition of Business Strategy Business Case Studies
2Categories of Strategy Business Case Studies

External References»

  • Business Strategy Research HBS
  • Journal of Business Strategy - From the Stakeholder Viewpoint: Designing Measurable Objectives Graham Kenny
  • The Business Strategy of Mcdonald’s Jing Han

CIO Desk Reference»

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Modified on 2017/08/25 09:30 by SuperUser Account  
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